RIYADH (Reuters) - Saudi Arabia has lifted a ban on books written by its ailing labour minister whose liberal tone provoked both the official clerical establishment and al Qaeda leader Osama bin Laden, government officials said on Sunday.

Ghazi Algosaibi, 70, is a former ambassador to London and a confidant of King Abdullah whose push for reform has fostered divisions among senior members of the religious establishment and between reformists and the most conservative clerics.

Algosaibi, who is undergoing medical treatment abroad, has occupied government and diplomatic positions and played a key role in the setting up of state-controlled Saudi Basic Industries Corp, the kingdom's largest listed company.

Bin Laden singled out Algosaibi in a taped message from his hideout in 2006 as a liberal fifth columnist.

Novelists publishing inside Saudi Arabia usually submit their work to the ministry of information in advance. Only a handful are technically banned, and many writers resort to Arab publishers outside Saudi Arabia and leave individual bookstores inside the country the choice of whether to risk importing them.

The kingdom, a key U.S. ally, is ruled by the Al Saud family in alliance with clerics from the austere Wahhabi school of Islam who oversee mosques, the judiciary and education, as well as running police who enforce religious morality.

Interior ministry police work with the morals squad to make sure unrelated men and women are kept apart, that women are covered from head to toe and do not drive, and that sharia law is fully implemented including a ban on alcohol.

Rulers of the world's top oil exporter country have wrestled with the idea of moderating Wahhabism since the 2001 attacks on the U.S., carried out mostly by Saudis, and the emergence of al Qaeda militancy against the Saudi government in 2003.

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